CHICOPEE, Mass. (WWLP) – Millions of Americans are anxiously awaiting the government’s decision on the next steps for student loan debt. 22News spoke with a financial advisor who says borrowers should have a plan, no matter what is decided.
The pause on student loan debt payments is set to expire August 31st and some people are hoping that won’t be the case.
“Keep it paused. There’s just too much going on right now and there are more important stuff to worry about than all of that,” said Dakodah Hall of West Springfield.
The freeze on student loan payments has been extended multiple times since the start of the pandemic. Currently about 44 million borrowers owe $1.7 trillion in student loan debt and while the millions of borrowers wait on a decision from the White House in the upcoming days, financial experts say be prepared.
“I think one of the most critical things a borrower could do while you are waiting is anticipate, what is it going to look like if student loans restart,” said Financial Advisor Darren James of Northwestern Mutual. He also suggested the following tips:
- Take a look at your current budget.
- Question what will your life look when you start making those payments again.
- Stay up to date on your current student loan balance by logging onto the The Federal Student Aid website.
- Create a plan on how you can put your students loans back into your budget.
“But know that there are options. A lot has changed, so you may be in a new income situation. Thinking about things like getting on the income-driven repayment plan versus a traditional repayment plan that you were on before,” said James.
If you can budget it, James adds to take advantage of the pause to pay down the principal on your student loan.
According to a new survey conducted by CNBC, 59% of Americans worry that student loan forgiveness will make inflation worse. This as borrowers are hoping for more financial relief. Proponents are calling on the White House to extend the pause on student loan payments and announce up to $10,000 in loan forgiveness.
22News spoke with Financial Expert Mark Teed from Raymond James Financial about the impacts on the economy if student loans were forgiven, “If they canceled those, then what would happen is that the government would have to make those payments to the people on the other side of those bonds and that would just mean the government would have to print more money to pay those back. Every bit of spending that we do now is just adding to that little fire of inflation. So the more that we can start to cut back on spending, its a good thing.”
The survey also found that 30% of adults say there should not be student loan forgiveness for anyone. However, 34% of the respondents say only those in need should have their loans forgiven.